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Friday, December 21, 2018

Higher electricity bills next year?

KUALA LUMPUR: Households may be facing higher electricity bills as the Electricity Industry Fund (EIF), which is used to absorb the increase in cost in the form of surcharge, may run out next year.

A few analysts in the power sector, contacted by NST Business, suggested that the fund is believed to have dwindled.

This is on top of another likely scenario in which enterprises, impacted by the higher electricity monthly surcharge of 2.55sen/kwh next year starting March until June, may pass along the extra cost to end consumers.

The new surcharge for the first half of next year is higher than the current surcharge of 1.35sen/kwh as the Energy Commission approved Tenaga Nasional Bhd (TNB) to continue with the Imbalance Cost Pass Through (ICPT) mechanism.

Currently, domestic consumers are not directly affected as they are being subsidised by EIF.

"The fund is running out soon, probably next year. This may affect the domestic consumers," two analysts familiar with the matter told NST Business.

Another analyst said the manufacturing industry which heavily utilise machines in their production may have to pass on the higher surcharge to consumers if the increase is sizable.

Rakuten Trade head of research Kenny Yee said however there are plans to liberalise the transmission and distribution of energy, which will be positive for the sector.

“This is a positive move as efficiency will improve. As a result, electricity prices may reduce,” he added.

Imbalance cost for the period of between July and December this year was announced at RM1.8 billion which translates to 3.43sen/kwh.

However, MIDF Research said not all of the imbalance cost will be passed through via ICPT in the first half of next year given cost and revenue adjustments for TNB.

Post-adjustments, the research firm said the imbalance cost that will be passed through amounts to RM948 million, translating to a 2.15sen/kwh average monthly surcharge in the first six months of next year, higher than the 1.35sen/kwh current paid.

“For January-February 2019, ICPT surcharge is maintained at 1.35sen/kwh while from March to June ICPT surcharge will increase to 2.55sen/kwh. All in, this should workout to an average 2.15sen/kwh surcharge per month,” the research firm noted.